Looking back on the year, the big trend has been the increasing dominance of the 2 x 2 matrix of Apple and Samsung, phones and tablets. If you don’t fit one of the four quadrants in that matrix and you’re in the electronics business, you probably didn’t have a great year. Even though tech giant Microsoft did what looks like a great job on the hardware for the Surface tablet, its strategy of competing with its OEMs and the decision to try to have one Windows version for consumer and professional PCs seem to have really undermined its success.
I said back in October that the PC industry needed Windows 8 to be ‘transformative’. As we draw to the end of the year, it seems clear that Microsoft has not achieved this so far and even fans of the company are drawing parallels with the company’s launch of Vista. As I also said back then, using every other OS from Microsoft is the best rule, so I think I’ll stick with Windows 7 until we get to 9!
Apple stands astride the whole of US industry with its huge market capitalisation and increasing dominance. Samsung dominates the Korean economy. The extent of that domination, and of the other chaebols in Korea, was highlighted to me by data quoted in the FT today, that the top five chaebols (Samsung, Hyundai, LG, SK and GS) are now equivalent to 57% of economic output, compared to around a third in 2007. It’s hard to compare the diiferent economies and companies, but the Economist reckoned in August this year that Samsung had about half the impact on Korea, financially, that Nokia had on Finland at its peak. Still, that makes the combined chaebols very, very ‘big fish’ in a relatively small pond.
This week, a new president, the first female to get the job in Korea, Park Geun-hye was elected. The FT reports that Ms Park has made the reduction of the influence of the chaebols an important part of her election manifesto (although it seems that she was less extreme than her left-wing opponent). However, it’s not at all clear how to reduce the dominance of the groups, while maintaining the relatively strong economic growth that they have enabled. I know that suppliers to the chaebols find their own prospects for growth to be limited by the desire of the companies that they don’t supply the other big companies. I don’t know how the government will change that, but in the long term, it looks essential to building a resilient economy.
At the moment, it’s not obvious where the threat to the electronics chaebols is to come from, but there’s a good chance that it will be China, I think.
We’d like to wish you all good health and prosperity for 2013!